Porterdale may have to refinance a one-year tax anticipation loan next year as falling property vaues have withered the city's budget and totally depleted its reserves.

The loan taken out this fiscal year, which ends Dec. 31, was financed by BB&T for $150,000 and functions as a cushion to meet regularly recurring payroll and overhead expenditures while property tax and fee revenues arrive in lump sums at various times irregularly throughout the year.

Last year, Porterdale borrowed $100,000 in a tax anticipation loan, which was repaid at the end of the year in full. Officials are not sure whether this year's loan will be paid in full or added to a possible 2012 tax anticipation loan.

"The council will make that decision," City Manager Bob Thomson said Thursday. "We anticipate (repayment in) a lump sum once we get sufficient property taxes."

If property taxes are not sufficient to repay the loan in full, the city may refinance all or part of it if elected officials decide to take out a new tax anticipation loan for fiscal year 2012, he said.

The loan is necessary for municipalities with no money in reserves that can be used to meet regular expenses until property tax revenue comes in.

"There hasn't been a reserve in years," Thomson said.

As of Wednesday, Porterdale had collected nearly 24 percent - about $62,400 of an anticipated $266,930 total - of its projected property tax revenue this year, according to City Clerk Judy Johnson. However, Johnson said that the bulk of property tax revenue typically comes in at the very end of the year.

Specifically, some lenders who hold mortgages that include property tax liability in the loans they offer hold the tax money in escrow until the taxes are due, she said. That means that lenders will submit payments, some of which could total tens of thousands of dollars, near the end of December.

That irregular flow of money is what necessitates the tax anticipation loans. Some revenue, such as local sales taxes, ad velorem taxes and alcohol excise taxes, come in regularly every month. Others, such as property taxes and utility franchise taxes, are large sums that come all at once at different times through the year, Johnson said.

The city's net tax digest, which is the value of all of its land, buildings and vehicles, has shrunk by 43 percent in the last few years, from a high $28.8 million in 2007 to just more than $16 million in 2011. The digest declined by 5.2 percent this year.

To offset those tax revenue losses, the city earlier this year raised its millage rate to 19.892 from 17.518, making it the highest rate in the county. However, the city also has the lowest assessment value per housing unit.

This year's budget projected the amount of property taxes due at $300,000 and predicted a collection rate of about 89 percent. The total 2011 budget was $984,733.

A new 2012 budget proposal, which the City Council has not yet reviewed, estimated property tax revenue at $215,000. The entire proposed budget is $822,415.